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Performance Pay and Alcohol Use in Germany

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  • Mehrzad B. Baktash
  • John S. Heywood
  • Uwe Jirjahn

Abstract

We study the link between performance pay and alcohol use in Germany, a country with mandated health insurance. Previous research from the US argues that alcohol use as a form of “self-medication” may be a natural response to the stress and uncertainty of performance pay when many workers do not have access to health insurance. We find that the likelihood of consuming each of four types of alcohol (beer, wine, spirits, and mixed drinks) is higher for those receiving performance pay even controlling for a long list of economic, social and personality characteristics and in sensible IV estimates. We also show that the total number of types of alcohol consumed is larger for those receiving performance pay. We conclude that even in the face of mandated health insurance, the link found in the US persists in Germany.

Suggested Citation

  • Mehrzad B. Baktash & John S. Heywood & Uwe Jirjahn, 2021. "Performance Pay and Alcohol Use in Germany," Research Papers in Economics 2021-02, University of Trier, Department of Economics.
    • Handle: RePEc:trr:wpaper:202102
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    Cited by:

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    3. Baktash, Mehrzad B., 2023. "Overeducation, Performance Pay and Wages: Evidence from Germany," GLO Discussion Paper Series 1327, Global Labor Organization (GLO).
    4. Baktash, Mehrzad B. & Heywood, John S. & Jirjahn, Uwe, 2022. "Worker stress and performance pay: German survey evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 201(C), pages 276-291.
    5. Green, Colin P. & Heywood, John S., 2022. "Does Performance Pay Influence Hours of Work?," IZA Discussion Papers 15474, Institute of Labor Economics (IZA).
    6. Lucas Hafner & Benjamin Lochner, 2022. "Do minimum wages improve self-rated health? Evidence from a natural experiment," Empirical Economics, Springer, vol. 62(6), pages 2989-3014, June.
    7. Green, Colin P. & Heywood, John S., 2023. "Performance pay, work hours and employee health in the UK," Labour Economics, Elsevier, vol. 84(C).

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    More about this item

    Keywords

    Performance Pay; Alcohol; Stress;
    All these keywords.

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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